By G.Zandanshatar,former Member of the Mongolian Parliament and former Minister of Foreign Affairs

Lately, websites have been screaming loudly that freedom and human rights are being violated in Mongolia for both foreigners and local people. Those who run businesses are especially concerned, and live and work in constant fear.It is accurate to say that present-day Mongolia has turned into a real nightmare for foreign investors. Cases are sensationalized, regardless of whether the alleged perpetrator is guilty or not. When cases involve politicians or businessmen, they continue until the accused are forced to their knees for the alleged crimes.In Mongolia, we have an old saying about the sanctity of reputation that has seemingly been forgotten: “Break my bones instead of my reputation.” Since 2005, there have been numerous cases when peoples’ reputations have been insulted and assaulted. The system does not adjudicate or resolve cases according to the rule of law or well-established procedures, but rather through unsubstantiated, spurious, and unethical allegations that have polluted Mongolian society. And it doesn’t stop there.The assault on reputations that is characterized by false accusations is expanding and becoming evermore pervasive, thus creating a huge obstacle to our economy’s development and growth. It is unfortunate that the authorities are stirring up this circumstance, rather than seeking understanding, and taking firm action to combat misinformation and promote transparency and the rule of law.One of the classic examples is the court verdict recently rendered on the three former managers of SouthGobi Sands (SGS), which has been the object of sensational international news. If it is true that the three who have been accused are proven to have really committed tax evasion for their employer, SGS, then they should be punished according to the laws and procedures of Mongolia. No one would argue with this.But the case is not clear-cut or definitive. Doubt hangs behind the allegations because it is very unclear what kind of reasons or motivation are hiding behind the accusation. The ex-managers of SouthGobi Sands have been sentenced to long prison terms by the criminal court, which makes everyone, foreign and domestic, worried. Foreign experts, including the U.S. embassy, believes that this case has violated the three men’s human rights, and consequently, the case has been covered actively by U.S. media.A contributor to Fortune.com stated, “Rather than symbolizing due process in an emerging democracy, the trial’s numerous irregularities have raised fears that a country struggling with a resource curse has further dulled its economic prospects.” Bloomberg Business quotes Chuluunbat Ochirbat, an economic advisor to PM Saikhanbileg as saying, “It is an unusual practice in Mongolia that tax and other disputes are classified as criminal cases,” and Dale Choi, founder of Independent Mongolia Metals & Mining Research in Ulaanbaatar, adds, “It would create very negative publicity. Foreign investors and executives would be scared of signing documents in Mongolia.” Mining.com, in an article entitled “Mongolian verdict sends chill through mining community,” comments that if the court decision is not reversed, SouthGobi will be bankrupted.This is a small sample of the many stories that have appeared in U.S.and international media over the past several weeks regarding the court sentences of U.S. citizen Justin Kapla and Philippine citizens Hilarion V. Cajucom Jr. and Cristobal G. David.If we look briefly at this sensational international case, three ex-employees of the foreign-invested company SouthGobi Sands have been sentenced to prison. When, at the outset, the tax department detected a potential violation, they should have had independent experts prepare reports and statements in conjunction with the prosecutors and police overseeing the case. But the Ministry of Finance prepared the reports itself, without expert review.In addition, the ministry’s subsequent inspections only fueled exaggerated reports, instead of inviting independent experts to prepare their own report, affirming or rejecting the legitimacy of the tax inspectors findings. The foreign-invested SouthGobi had an international audit organization inspect and prepare independent reports, but these were ignored by the Mongolian court.Furthermore, the prosecutor initially requested that the three only pay a penalty, but later added the much stiffer request for prison terms. What attracts our attention most is the definition of the case as a criminal case, not a civil case. It is also puzzling that officials from the tax department were not present at the trial, and that the case had been returned twice because of insufficient evidence.Justin Kapla had worked for SouthGobi for only six months at the time of the trial, though the tax evasion case had been ongoing for five years. It is not very clear exactly which laws and rules are served in Mongolia. Obviously, we know that telephone justice dominates in our country.In the end, the three foreign citizens who were convicted were the hired employees of SouthGobi. It is very unfair and unjust that the company owners and directors escaped prosecution for tax evasion, if indeed it is true and proven. The owners and directors should be held responsible if there is evidence of wrong-doing, instead of sentencing ex-officers employed for only six months to one year.The three are imprisoned in a foreign country, accused of evading 6.8 billion USD in taxes. In court, they asked, “Did we really evade taxes and hide an amount of money that is equal to Mongolia’s GDP?” These sound like the words of a desperate person, but they highlight the irresponsibility of our country’s courts and monitoring organizations.The Mongolian authorities also drew a nonsensical and misleading parallel with the United States, arguing that if the same fraction of GDP was embezzled in the U.S., each politician would have 2.2 billion USD.U.S. citizen Justin Kapla filed a complaint with the U.N. High Commission on Human Rights last summer. Since then, he has noted repeatedly that his treatment and the irresponsible court decision will negatively affect foreign investment in Mongolia. If this negative news and reports continue to spread in international media, the reputation and credibility of the Mongolian courts will be further comprised, and fears will be fueled among people whose trust Mongolia’s needs.Several years ago, there was a case involving a Japanese investor who was sentenced to prison for drug abuse. He was ultimately released, but only after having to address and overcome many issues. First, the court had been playing around with investors from the Republic of China, Korea, and Japan. Then, as the mining industry grew bigger, the court started harassing other large foreign investors. It is no secret that small Chinese, Korean, and Vietnamese investors are commonly robbed, threatened, and slandered in cases brought on false charges.Private and public property is sacred in countries where a market economy exists.The government, or some faction on behalf of the government, are invading private and public property and taking it for themselves. This is a very poisonous and unfortunate chain of events, that communicates to domestic and foreign investors that their businesses and investments in Mongolia are not secure or protected.We know well that not only foreigners, but also our own people, are struggling to make a living. They are nonetheless being labeled “criminals” nationwide, and are accused of unproven crimes associated with “bribery and corruption.” What we don’t know is how many fathers, sons, mothers and daughters reputations, work, and lives are being tarnished and damaged by this variant of modern-day repression.Arresting, imprisoning, and punishing those who create wealth has become a sadness that plagues our society. This issue has elicited much criticism from lawmakers as well. During an interview on Mongol Television and News.mn, Member of Parliament U.Enkhtuvshin said, “Rich mining and business owners are the intentional main targets. The authorities conceal the reputation of the individual, his or her family and business through paid media tools. After that, they sentence him or her to imprisonment. The public is brainwashed by the media and think, ‘Oh, as expected, this guy has been sentenced for his – you know!!! – crime’”.These kinds of baseless accusations have sadly become commonplace in our society. My successor and now-former Minister of Foreign Affairs L.Bold once asked, “Who would want to live or work in a country where the authorities take away investors’ passports, ban them from traveling, and then arrest them for investing, after desperately inviting them to come in?” He added, “Mongolia has turned into a prison.”In fact, the time has come for us to understand that Mongolia’s current economic difficulties derive from a crisis of politics and from our political structure. Whose game is it, squeezing the foreign investors out at the same time that the whole world is speculating that Mongolia will go bankrupt from its debt crisis? Whose strategy is it?For the full article in its native tongue (Mongolian) visit: http://www.today.mn/p/3275